Accountant vs Bookkeeper: Whats the Difference?

bookkeeping vs accounting difference

To be an accountant, a person must have a minimum of a bachelor’s degree in accounting, business, or finance. Accountants often seek additional qualifications by passing a rigorous examination to become a certified public accountant (CPA). They sometimes also seek further certification to provide additional services.

bookkeeping vs accounting difference

This means recording transactions and saving bills, invoices and receipts so you have all the data you need to run reports. Accounting software makes it easy to store these documents and reference them in case of an accounting error or audit. As a bookkeeper, your attention to detail must be almost preternatural. Careless mistakes that seem inconsequential at the time can lead to bigger, costlier, more time-consuming problems down the road. Rarely does a bookkeeper work on one big project for an eight-hour shift; instead, a typical workday involves juggling five or six smaller jobs. Nearly all bookkeeping is done using computerized accounting software and programs, so bookkeepers should be comfortable learning new technology if not proficient in it.

Is accounting better than bookkeeping?

There is also ample opportunity for on-the-job training, apprenticeships, and post-secondary coursework that can help someone become a skilled bookkeeper. A skilled accountant is the person who helps you scale and plan for the next steps in your business. They analyze your books, help you understand what’s working and what needs to change, and they offer the expertise needed to help you move into the next phase of your business. When it comes to the ledger specifically, your accountant might determine the accounting method (cash or accrual), then periodically adjust entries to update an account per the chosen method. For the most part, though, your accountant uses the books to assess your business and strategize for the future.

From monitoring day-to-day transactions to understanding profitability, cash flow and more, there is a lot to stay on top of. While the terms bookkeeping and accounting are often used interchangeably, bookkeeping is, in essence, the foundation on which accounting is built. Bookkeeping refers specifically to the tasks and practices involved in recording the financial activities, while accounting is more analytical in nature. Other programs charge annual or monthly fees and offer advanced features such as recurring invoices or purchase orders. While these services come at a cost, they can maximize the accuracy and efficiency of vital financial management processes.

Preparing for the CPA Exam

Bookkeepers play a vital role in managing financial records, while accountants offer valuable expertise and financial advice. Depending on your needs, you may want to consider working with both a bookkeeper and an bookkeeping vs accounting difference accountant. As discussed above, the main objectives of accounting and bookkeeping are similar but still different in many ways. Both disciplines work hand in hand to determine the financial health of a business.

The bookkeeper can be found working in small, medium, or large business organizations. Bookkeeper’s responsibilities are keeping track of the company’s financial records and documenting them in appropriate journals or ledgers. Further, he prepares them in a way that ensures systematic recording and classification of business transactions. The roles of bookkeepers and accountants complement each other, and often overlap. Accountants can perform bookkeeping tasks, and bookkeepers can assist in preparing financial reports. Bookkeeping is the recording of all a business’s financial transactions, such as sales, purchases, and bills.

Preparing for the CPB Exam

They must also meet ongoing education requirements to maintain their accreditation. However, if your accountant does your bookkeeping, you may be paying more than you should for this service as you would generally pay more per hour for an accountant than a bookkeeper. When deciding whether you should hire an accountant vs a bookkeeper, the answer will depend on what kind of help your business needs. These steps require a more in-depth understanding of finances, so an accountant will typically perform them.